Loading...

The Erosion of Union Membership focused on the United States

Seminar Paper 2016 34 Pages

Economics - Job market economics

Excerpt

Table of Contents

I. Introduction

II. Development of unionism
1. Union movement in the United States
2. Comparison with European countries

III. Duties of trade unions and their relation to employers
1. Collective bargaining
2. Case of disagreement between union and employer

IV. Causes for joining trade unions
1. Collective bargaining
2. Representation
3. Higher earnings
4. Health insurance premium
5. Retirement and paid leave

V. Influences on union membership decline
1. Structural changes
a. Sectoral changes
b. Gender-related changes
c. Short-time employment
d. Regional employment changes
2. Anti-union legislation and activities
3. Cyclical changes

VI. Consequences

VII. Conclusion

VIII. Bibliography
1. Content
2. Illustrations

IX. Appendix

I. Introduction

Surveying some recent data and the empirical literature from various disciplines, this research paper attempts to shed some light on the topic ‘The Erosion of Union Membership in the United States’. Trade union membership density describes union membership as a percentage of all employees excluding the self-employed and represents a significant measurement for union success. Union density in the United States has declined significantly in recent decades. The purpose of this research is to determine why such a decrease is occurring. There are several factors that contribute to this plunge in union membership density. In order to discover those it is essential to take a look at the history of the US labor union movement and some major factors and circumstances that posed an impediment to its progress as well as to examine the duties of unions and causes that impel employees to join unions. In conclusion the impact of plummeting union membership will be elucidated.

II. Development of unionism

1. Union movement in the United States

The beginning of trade unions in the USA was marked by skilled craftsmen that united in local unions in 1790 in order to defy the decrease in payment induced by burgeoning and competitive markets (Booth, 1995, p. 36 f.). After a long litigation process and conspiracy reproaches trade unions were eventually legalized in 1842 (cf. Taylor and Witney; Reynolds cited in Booth, 1995, p. 37). As industrialization took place during the 19th century, labor mobility and a more competitive labor market slowed down and weakened the unionization of a newly developed class of semi-skilled factory workers due to their easy replaceability by unskilled workers, such as women, children and immigrants. It was not until the post-Civil War depression from 1873 to 1878, however, that unions were able to survive a depression, because the progression of interstate markets promoted national unionization. Unions were handling benefits, apprenticeships, strikes, contracts and full-time officials were accountable for survival and expansion of unions (Booth, 1995, p. 37 f.).

At the end of the 19th century the American Federation of Labor (AFL) consisting of autonomous unions organized by crafts dominated the Knights of Labor, the other big labor organization, which unified all types of workers and especially a lot of easily replaceable unskilled workers, and managed to grow slightly, albeit vastly heterogeneous (Booth, 1995, p. 38). Trade unions were able to grow, although since 1870 employers could lawfully issue injunctions concerning actions that threatened their property right of profit-orientation and since a 1895 Supreme Court legislation could even enjoin unions from encouraging workers to break ‘yellow-dog’ contracts that compelled the worker not to join a union (Wolman cited in Booth, 1995, p. 39). As late as 1932 the Norris-La Guardia Anti-injunction Act prohibited those injunctions and limited judicial power to enjoin unions from merely peaceful activities (Booth, 1995, p. 39 ff.).

In comparison with the labor movement in Great Britain – the cradle of the Industrial Revolution – the US labor movement has been weak until the end of the 19th century (Booth, 1995, p. 39). This can be traced back to the inferior motivation of US industrial workers to join unions, because the wages of US factory workers were higher than those of European factory workers (cf. Lebergott; Wheeler; Boyer, Hatton and Bailey cited in Booth, 1995, p. 39). Besides the higher heterogeneity of US workforce including immigrants and after the Civil War also blacks hindered unionization of unskilled workers (Booth, 1995, p. 39). The sheer size of the USA complicated national organizations (cf. Phelps Brown cited in Booth, 1995, p. 39). Furthermore, compared to Britain, which held technical leadership, US employers had a higher aversion to unions and tended to destroy new unions due to greater concern about innovation competition and new competitors entering the market (cf. Phelps Brown cited in Booth, 1995, p. 39 f.). Additionally, the class-conscious Britons based their labor movement on working-class solidarity and ‘corporate consciousness’ with help from intellectuals, whereas US workers had middle-class aspirations or anticipated upward mobility in general, and thence lacked cohesion (Kahn-Freund cited in Booth, 1995, p. 40).

At the beginning of the 20th century industrial concentration rose and thereby the incentive to cooperate and form a cartel, but anti-trust laws followed and especially the secondary boycott was outlawed, which together with hostile employers undermined trade unions and slowed down their development (Booth, 1995, p. 40).

The First World War strengthened unions and union membership density rose, but fell few years after the war (cf. ill. XVIII).

Formerly hostile, the attitude of employers and the government changed during the Great Depression with the passage of the Norris-La Guardia Act of 1932. What followed were policy reforms under President Roosevelt’s New Deal aimed at equalization of labor in relation to big business. The National Labor Relations Act, also called the Wagner Act, which was passed in 1935, guarantees the rights of workers to unionize and to bargain collectively and limited employer power. Advocates of the act argued that it would lead to stability and higher efficiency of employment relations, generating cost savings that would compensate risen labor costs (Kochan et al. cited in Booth, 1995, p. 41). The act stipulates that employers are obliged to bargain collectively with trade unions joined by a majority of employees, and that they are not allowed to engage in anti-union conduct. The National Labor Relations Board (NLRB) was founded and charged with the enforcement of the act, particularly to investigate and remedy unfair labor practices used by employers and to carry out union representation elections in adequate units. The Congress of Industrial Organizations (CIO), whose establishment in 1938 was protected by the Wagner Act, unionized the car and steel industries on an industry-wide basis (Booth, 1995, p. 40 f.).

The significant increase in membership during the Second World War stems from rise in employment in industries, such as steel, cars, aircraft, shipbuilding, mining, electrical manufacture and transportation (Marshall et al. cited in Booth, 1995, p. 41), since the war stimulated demand for products of these industries. Near the end of the war, unofficial strikes in the coal industry damaged the unions’ reputation. The War Disputes Act, also known as the Smith-Connally Act, was passed in 1943 with the purpose of regulation of strikes. Intending to foster the union movement, the CIO founded the Political Action Committee (PAC) in 1943, and the AFL founded Labor’s League for Political Education (LLPE). These were the first organizations to perform official political lobbying (Booth, 1995, p. 42).

Aversion on the part of employers and the public towards the Wagner Act grew, as unions succeeded owing to that act and misuse of power, such as discrimination and corruption, which became more evident with the rise of the unions (Taylor and Whitney cited in Booth, 1995, p. 42). Therefore an amendment to the Wagner Act was enacted: The Labor-Management Relations Act, also called the Taft-Hartley Act, which imposed restrictions on trade unions (Booth, 1995, p. 42) and thus limited their power.

While the 1940s were marked by step by step formalization of collective bargaining, hence fortified industrial unions dealing with multi-annual contractual agreements concerning wage, complaints, arbitration and fringe benefits, the 1950s were marked by stability through the fusion of the AFL and CIO in 1955, which defused competition between unions. Despite an extension of benefits covered in collective agreements, union membership density did not experience any growth but started to decrease from 1955. Few unions that engaged in corruption managed to exacerbate the damaged reputation of unions and further restricting legislation followed: The Labor-Management Reporting and Disclosure Act, also known as the Landrum-Griffin Act, regulates internal affairs of unions as regular election of union officials and financial disclosure and declares the rights of union members (Booth, 1995, p. 43 f.).

In the 1970s and 1980s in the process of personnel management development, wherein human capital become more valued, that new approach made unions redundant to a certain extent. Since the 1970s unionized industries such as steel, car and textiles were confronted with risen competition due to high quality imports and technological progress and with an expanding union wage markup – the union-nonunion wage differential – which stimulated anti-union behavior on behalf of employers (Booth, 1995, p. 44). Anti-union practices include innovative personnel management, anti-union legal proceedings, unfair labor practices, employment of consultants for anti-union strategies at certification elections of unions, and the opening of new facilities in traditionally anti-union areas such as the South (See Kochan et al., Farber and Rogers cited in Freeman and Medoff cited in Booth, 1995, p. 44). Since the beginning of industrialization the North has been characterized by manufacturing and heavy industry, while the South had focused on cotton production and agriculture. The anti-union attitude of the South attitude is mirrored in the fact that labor union membership density has been lower in Southern states than in Northern states (Hirsch, 2001, p. 52) were unionism is rooted. Since the 1960s there has been scarcely punished illegal conduct by employers in order to inhibit successful representation elections of unions (Dickens, Weiler, Freeman and Medoff, Flanagan, and Rogers cited in Booth, 1995, p. 44).

In an effort to defend against abuses of laws guaranteeing employees’ rights concerning unionization, the Labor Law Reform Bill was introduced in 1977, wherein the acceleration of the union representation process, harder punishment of employers participating in illegal anti-union practices and availability of equal time for the presentation of the union case before a presentation election were defined. However the union-friendly bill did not become law mainly owing to resistance by employers (Booth, 1995, p. 45).

Since the 1950s unions face an almost perpetual erosion of union density. Contrary to this, public sector union density has nearly tripled from 13 percent in 1956 to 36.90 percent in 1991 (Hirsch and Macpherson cited in Booth, 1995, p. 45), which can be ascribed to less rivalry in the public sector as opposed to the private sector and therefore less motivation to hinder unionization (Freeman and Medoff cited in Booth, 1995, p. 45). Moreover, in 1962 federal public employees were endowed with the right of unionization and collective bargaining. From the 1960s state and municipal employees were enabled to unionize (Booth, 1995, p. 45).

Abbildung in dieser Leseprobe nicht enthalten

Fig. 1: Trade union density in the USA from 1973 to 2013 in percentage terms

(Source: Own representation based on OECD iLibrary, November 17th, 2015)

As depicted in ill. I trade union density has declined nearly steadily in the last forty years and unions have been losing power in the collective bargaining process.

2. Comparison with European countries

Abbildung in dieser Leseprobe nicht enthalten

Fig. 2: Average trade union density in 10-year intervals of selected European countries

(Source: Own representation based on OECD iLibrary, November 17th, 2015; appendix Ill. III)

As well as the United States also the most European countries have a downside trend in trade union density. Ill. II shows the development of trade union density of fourteen European countries over the last 40 years whereby there was taken the average of density in each ten years. All nine countries, Austria, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Switzerland and the United Kingdom register a steady decline. France is the country which has the lowest trade union density and the biggest decline. While between 1974 and 1983 average trade union density was 19.50 percent, it has sunk about 60.72 percent to only 7.66 percent in the period of 2004 to 2013. In Austria, Germany, the Netherlands and the United Kingdom average density has fallen almost 50 percent within 30 years in ten year intervals. The lowest decline shows the Netherlands with merely 3.42 percent. Belgium is the only country which had a reverse development and a steady increase in average trade union density.

The reason for much higher trade union density and nearly no decline in union membership in the Scandinavian countries Sweden, Finland and Denmark in comparison with other European countries can be explained by an arrangement known as the Ghent System. The Ghent System is a voluntary system of unemployment insurance where trade unions are responsible for distributing the unemployment insurance rather than a state agency. Sweden and Finland, along with Denmark make up the countries which have adopted such a system that is heavily subsidized by public finances. It was discovered that the presence of a Ghent System has a great influence on union membership and motivates workers to become members. There is a positive empirical correlation between the Ghent System and trade union density. (Dimick, n.y. , p.6).

III. Duties of trade unions and their relation to employers

1. Collective bargaining

Trade unions are representatives of employees – traditionally of blue collar workers, but nowadays also of white-collar workers. They communicate the employees’ interests to their employers in exchange for membership fees.

When in the course of economic progress or recovery trade unions perceive that the risen wages of employees lead to higher production costs, which cause higher prices due to a constant markup (on marginal costs) targeted by producers, they demand a further increase in wages in an attempt to maintain real wages and their purchasing power. Although they orientate themselves by real wages, nominal wages are actually negotiated. Usually wages are determined for a minimum of one year. Thus price expectations are crucial. This results in a wage-price spiral as trade unions and producers anticipate inflation and induce increase in wages and prices respectively.

In this process trade unions and employers bargain collective wage agreements before the old ones are due to expire. According to the National Labor Relations Board, one party must inform the other party 60 days before the expiration date or suggested termination day, if it intends an early termination (https://www.nlrb.gov/rights-we-protect/employerunion-rights-and-obligations).

Besides compromises on wages, these collective agreements include terms and conditions of working hours, vacation time, insurance, safety precautions and other mandatory matters such as the impact of management strategies on employees. The parties are obliged to bargain in good faith, which means that they must truly show endeavor to reach an agreement (https://www.nlrb.gov/rights-we-protect/employerunion-rights-and-obligations).

2. Case of disagreement between union and employer

In case no agreement is obtained and ‘the employer declare(s) impasse, and then implement(s) the last offer presented to the union’, the union can ‘disagree that true impasse has been reached and file a charge of an unfair labor practice for failure to bargain in good faith.’ The National Labor Relations Board will then deal with the complaint. Also either party can inform the Federal Mediation and Conciliation Service (https://www.nlrb.gov/rights-we-protect/employerunion-rights-and-obligations).

IV. Causes for joining trade unions

It is well-established that unionized workers in the United States are covered by more extensive employee benefits by comparison with nonunion workers (Budd, 2005, p. 4). Hence there are several causes for being a trade union member. In the following the main causes are described:

1. Collective bargaining

The most important cause for being a union member is to benefit from the union's collective bargaining power. Collective bargaining is the heart and soul of the trade union and the main source for greater benefits for unionized workers. Economists call it the ‘monopoly face’ or ‘monopoly effect’ because they liken union bargaining power to that of a monopolist (Budd, 2005, p. 17). The collective bargaining power enables union members to channel worker discontent into improved workplace conditions, wages, health and safety issues and productivity (Blanchflower and Bryson, 2004, p. 384). While nonunions have limited power if they try to negotiate as an individual union members have more power as a cohesive group and benefit from collective voice to be heard and enforce their requirements.

2. Representation

Another key cause of joining a union is that union members can profit by a union representative. A union representative is a person who represents and defends the interests and works on the behalf of the union members on a fairly and effectively way. In opposition to nonunions unionized workers do not have to act on their own if they have a personal issue with the employer of the organization or company they work for.

3. Higher earnings

An additional important cause is that unionized workers enjoy higher earnings as compared to non-unionized ones. Ill. IV indicates the existence of the union wage markup: In the period 1992-2014 the earnings of union members were significantly higher than of nonunion employees. Ill. IV also establishes that union members profit from about 20 percent higher earnings than nonunion employees. This trend appears to persist despite declining membership (Long, 2013, p. 16).

Abbildung in dieser Leseprobe nicht enthalten

Fig. 3: Median weekly earnings of full-time wage and salary workers (16 years and over) by union affiliation and selected characteristics, annual averages

(Source: Own representation based on OECD iLibrary, November 19th, 2015)

4. Health insurance premium

A further cause for being a union member refers to the benefits concerning health insurance premium. The share of premiums workers were required to pay for their medical coverage varies by bargaining status. Ill. V illustrates that private industry nonunion workers were responsible for 23 percent of the total single coverage medical premium, whereas the share of premiums for union workers was 13 percent. In the case of family coverage premiums for family coverage was 35 percent for nonunion workers and 16 percent for union workers. Hence the share nonunions have to pay is nearly double the share of union members (Bureau of Labor Statistics, 2015, p. 1).

Abbildung in dieser Leseprobe nicht enthalten

Fig. 4: Share (percentage terms) of medical premiums paid by private industry workers

(Source: Bureau of Labor Statistics News Release, July 24th, 2015)

[...]

Details

Pages
34
Year
2016
ISBN (eBook)
9783656986089
ISBN (Book)
9783656986096
File size
800 KB
Language
English
Catalog Number
v336846
Institution / College
University of Hohenheim – Institut für Volkswirtschaftslehre
Grade
1,7
Tags
Union Membership Decline Union Membership Decline Union Members Union Members Erosion of Union Membership United States USA Gewerschaften Trade Union Labor Union Gewerkschaftsmitgliederschwund Gewerkschaftsmitglied Trade Union Member Vereinigte Staaten

Share

Previous

Title: The Erosion of Union Membership focused on the United States